Internet sales tax likely dying in lame duck session

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Despite protests from trade groups and some state governors, U.S. House of Representatives Speaker John Boehner (R-OH) continues to remain resolute in his refusal to allow the Marketplace Fairness Act (MFA) to receive a hearing on the House floor.

Currently, online retailers are not required to collect sales taxes on purchases made from states in which they are not physically located. MFA would require retailers to remit tax revenue to states and other tax jurisdictions, regardless of the location of their physical centers of operation.

However, Boehner has resisted pressure from outgoing Senate Majority Leader Harry Reid (D-NV) and other supporters of the tax measure. In November,Boehner spokesman Kevin Smith told reporters in November ???the speaker has made clear in the past he has significant concerns about the bill, and it won???t move forward this year.???

Although supporters such as the U.S. Conference of Mayors are worried about millions of dollars of revenue that escapes capture by government as tax revenue, Mercatus Center at George Mason University Senior Research Fellow Veronique de Rugy insists that the rise of e-commerce is, instead, beneficial to the American economy.

Calling MFA ???problematic,??? de Rugy cheered MFA???s likely demise in this session, saying ???it???s a good thing that they???re not moving forward with it.???

???People need to be able to escape the high taxes in their states,??? she explained. Through this exit, people can put some pressure on the jurisdiction they belong to, and try to force them to bring down their tax level. This exit is a force for smaller government and we should be encouraging it.???

Should the 113th United States Congress conclude without MFA receiving a vote, the measure would need to be resubmitted as a new bill during the next session.

Jesse Hathaway ( is managing editor of Budget & Tax News.